Amy Robinson – Daily Journal of Commerce /news/author/amy-robinson/ Building and Construction News in Portland, Oregon and the Pacific Northwest Thu, 29 Nov 2018 22:21:19 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.6 /files/2023/08/favicon.webp Amy Robinson – Daily Journal of Commerce /news/author/amy-robinson/ 32 32 OP-ED: Heed Washington’s new paid family and medical leave program /news/2018/11/29/op-ed-heed-washingtons-new-paid-family-medical-leave-program/ Thu, 29 Nov 2018 21:52:19 +0000 /?p=182760 Employers with employees in Washington have little time left to prepare for compliance with a new law granting leave for a handful of specific life events.

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Amy Robinson
Amy Robinson

Washington this year enacted a new that will provide employees in the state with up to 12 weeks of paid leave to:

  • welcome a new child in their family (through birth, adoption, or foster placement)
  • address a serious illness or injury to himself or herself
  • care for a seriously ill or injured relative, or
  • prepare for a family member’s pre- and post-military deployment activities, as well as time for child care issues related to a family member’s military deployment.

Unless employers opt to pay these benefits directly under an approved plan, they will be funded through an insurance program administered by Washington’s Employment Security Department (ESD). Benefits will be based upon a percentage of the employee’s average weekly wage during the qualifying period up to a maximum amount. The initial maximum will be $1,000 per week, but that is expected to be adjusted annually, just like minimum wage. While these benefits can’t be used until Jan. 1, 2020, the reporting and withholding requirements for employers kick in Jan. 1, 2019.

The ESD recently published a “toolkit” for employers (available at ) to help them comply, but here is a quick overview of three key details all employers with employees in Washington need to know now:

  1. Employers with even a single employee in Washington are expected to comply.

Washington employers are now required to report employee hours worked, wages earned, and additional information to ESD in April 2019, and every quarter thereafter. Unlike some other leave statutes, this law does not limit coverage by size. So, if a business has even one employee in Washington, it is expected to comply. The only employers that are fully exempt are the self-employed (although they may opt in), federal employees, federally recognized tribal employers (they also may elect to opt in), and employers that have employees in Washington only temporarily (more on that below).

Employers with fewer than 50 employees do not have to contribute toward the premiums, though they must still submit the required reports, and timely withhold and remit the employee’s portion of the premiums. There will also be grants available to certain smaller employers (i.e., those with fewer than 150 employees or those with fewer than 50 employees that have voluntarily opted to pay the employer portion for the premiums) to help defray the cost of hiring temporary employees to cover an absence due to an employee’s use of these paid leave benefits. Watch for more on that in the coming weeks.

  1. The law has a broader definition of when employees are considered to be “working in Washington” and thus potentially entitled to benefits.

Employees who regularly work in Washington are covered, but so are employees who may be only temporarily in Washington if they work more than 820 hours in Washington. The statute is also one of the first to address “virtual workers” (i.e., those who may not report to work at an office location but commute from a home office or community workspace) and makes them eligible for benefits if: (a) the employer’s base of operations is in Washington, or (b) the “place where the services are directed” is in Washington, or (c) the employer is not based in Washington, and the services are not directed to Washington, but the worker lives in Washington. This is important for employers, like many in the Portland-metro area, with employees who occasionally work from home on the Washington side of the Columbia River and others with remote work arrangements.

  1. Premiums need to be withheld as of the very first payroll in January 2019.

For 2019, the total premium contribution for both types of leave is 0.4 percent of each employee’s gross wages. The total premium is allocated between the two types of paid leave benefits as follows: 1/3 to paid family leave funded entirely by employee contributions and the other 2/3 to medical leave for which the employee is required to contribute 45 percent of the premium. That means the employee’s overall share of the premiums, which must be deducted from their pay unless the employer voluntarily opts to pay all or some of it on their behalf, is 63 percent of the total premium.

Employers must then pay no less than the mandated employer-paid portion (37 percent) at a minimum unless they have fewer than 50 employees, in which case they are permitted but not obligated to contribute toward the employer share.

Be aware: the premiums have to be withheld each pay period (they can’t be made up later, according to the rules currently proposed) and remitted to ESD on a quarterly basis starting in April 2019. Detailed information on calculating premiums, including a calculator for estimating premiums, is available at www.paidleave.wa.gov/employers.

Be sure to stay tuned for more information expected in early 2019 from the ESD (visit www.paidleave.wa.gov) about how benefits will be administered and about rules around notice and employee eligibility.

Amy Robinson is a PC shareholder practicing in its employment practice group. She represents clients in Oregon and Washington. Contact her at 503-598-7070 or amy.robinson@jordanramis.com. Information in this article should not be considered legal advice for specific situations. Specific questions should be directed to qualified legal counsel.

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OP-ED: Does ‘at-will’ employment still exist in Oregon? /news/2017/04/21/op-ed-does-at-will-employment-still-exist-in-oregon/ Fri, 21 Apr 2017 22:19:15 +0000 /?p=163036 “So, tell me, is there really such a thing as ‘at-will’ employment in Oregon anymore?” This is a question that comes up more and more frequently from clients, friends or […]

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Amy Robinson
Amy Robinson

“So, tell me, is there really such a thing as ‘at-will’ employment in Oregon anymore?” This is a question that comes up more and more frequently from clients, friends or others at social gatherings during discussions about my work. The short answer I usually give is: “Yes, but it doesn’t always seem that way.”

In fact, employment “at will” is still the of the land in Oregon. Under this principle developed by the courts (what we call “common law”), rather than by legislation, an employer is free to end the employment relationship at any time and for any reason, with or without cause, and with or without notice. However, there are so many exceptions to this rule that it can be eclipsed in practice, even if still true in theory.

To give you an idea of how the exceptions can dominate the rule in today’s workplace, here is a very short summary of the most common exceptions that affect “at-will” employment in Oregon. Note that the focus here is on private employees; public employees typically have additional protections.

Contractual limitations

Written employment agreements may provide some commitment to employment for a particular length of time or limit the circumstances for which an employee can be terminated. For example, some agreements provide that the employee must be given a certain amount of notice, or cannot be terminated at all, unless the employer has “cause.” As typically defined in a contract, “cause” refers to specific wrongful acts such as theft, gross misconduct, violations of the law or company policy, or failure to follow directives.

Likewise, union contracts and collective bargaining agreements typically include negotiated contractual terms that constrain an employer’s ability to terminate union-represented personnel without following negotiated layoff rules or taking specific disciplinary steps in advance.

Employers also occasionally create contractual limitations, usually unknowingly, by written policy, employee handbooks, verbal commitments, and even past practice. This is precisely why most employers include a disclaimer in their handbook, or other written policies, that advises the reader that policies, practices and verbal discussions cannot be relied upon and that a written agreement signed by an authorized representative of the company is required to create a binding contractual commitment of the employer. Without an appropriately and clearly worded disclaimer, an employer may leave itself exposed unnecessarily.

Anti-discrimination laws

A host of state and federal laws prohibit employment decisions on the basis of certain defined categories, which we refer to as “protected classifications.” These are the obvious categories that most of us in today’s workplace know and expect, including an individual’s race, color, religion, national origin, citizenship, age, gender, sexual orientation, gender identity and gender expression, disability, protected genetic information, pregnancy, and/or veteran/military status, as well as association with a person in a protected classification. In addition, lesser-known protected classifications under Oregon law also exist, including marital status, family relationships (with limited exceptions), expunged juvenile court records, off-duty tobacco use and wage garnishments.

Anti-retaliation protections

A host of laws also forbid adverse employment consequences (including termination) because an employee exercised certain rights or legal remedies. This includes what are traditionally referred to as “whistleblower” protections, which impose strict protections for workers who have made a complaint or raised legitimate, good faith concerns about things like:

  • discrimination, harassment or retaliation on the basis of any protected classification (listed above);
  • wage and hour compliance;
  • health and safety issues;
  • financial reporting, accounting errors or fraudulent practices; or
  • any other potential violation of a state or federal law, rule, or regulation.

Thanks to fairly robust anti-retaliation protections now included in most state and federal employment statutes, this exception to “at-will” employment goes further than just classic whistleblowing scenarios like those described above, and prohibits terminations based in whole or in part upon the following additional employee activities or events:

  • engaging in a union or other related activities protected by the National Labor Relations Act, which includes voicing concerns and engaging in discussions with other employees or management about wages, working conditions and unionization. This is not limited to only workplaces where a union or collective bargaining agreement is already involved.
  • participating in certain criminal/civil proceedings, agency proceedings or wage claim activities, including pursuing a lawsuit against the employer, testifying at unemployment or workers’ compensation insurance hearings, or cooperating with BOLI enforcement efforts.
  • being injured on the job and/or filing a workers’ compensation claim.
  • being absent for one or more of the reasons protected by applicable leave laws, which in Oregon may include: Oregon sick leave, FMLA/OFLA leave, crime victims leave, domestic violence leave, leave for military service, military family leave, jury/witness duty and pregnancy and/or disability leave.

So what does all of this mean to you?

It means you probably want to make sure that your business’ definition of employment “at will” is consistent with current standards and that you are aware of the exceptions. We also recommend employers be proactive about documenting the reasons leading up to a termination. For example, if you are contemplating discipline for attendance, make sure documentation reflects that any protected absences were excluded from consideration. While you may not ultimately need to defend your decision in court, if you do, it can be critically important that your paper trail reflects your true rationale and doesn’t stray into the impermissible reasons discussed previously. Finally, as always, consult qualified counsel if you have any cause for concern or want to make sure you have spotted any applicable exceptions before you proceed with termination.

Amy Robinson is a PC shareholder practicing in its employment practice group. She has Senior Professional in Human Resources (SPHR) certification as well as a Senior Certified Professional (SHRM-SCP) designation from the Society for Human Resource Management. Contact her at 503-598-7070 or amy.robinson@jordanramis.com.

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OP-ED: Sick leave update: pitfalls and a prevailing wage wrinkle /news/2016/10/21/op-ed-sick-leave-update-pitfalls-and-a-prevailing-wage-wrinkle/ Fri, 21 Oct 2016 22:03:31 +0000 /?p=157366 Oregon law now mandates that sick leave benefits be provided to employees working in the state. For employers with 10 or more employees in Oregon or more than six employees […]

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Amy Robinson
Amy Robinson

Oregon now mandates that sick leave benefits be provided to employees working in the state. For employers with 10 or more employees in Oregon or more than six employees in the Portland-metro area, the leave is paid. For employers with fewer employees than the minimum threshold, the leave is unpaid. The law exempts employees who are covered by a collective bargaining agreement, hired through a hiring hall or similar referral system, and who already receive such benefits through a joint multi-employer-employee trust or benefit plan.

The law allows the sick leave benefit to be satisfied by a substantially equivalent vacation, sick leave, or paid time off (PTO) policy, and many employers are in that boat. However, don’t assume that because an existing company policy provides at least 40 hours of paid leave, it doesn’t need to be updated. This is unlikely to be true.

In fact, many pre-existing policies actually have gaps, contrary provisions or other procedural requirements that conflict with the new law and require an update to achieve compliance. Here are some:

  • Eligibility is too narrow. Many pre-existing policies provide leave only to regular, full-time employees, and often only after a certain time period. The new law requires that leave begins to accrue immediately upon hire, and irrespective of whether the person is exempt or non-exempt, full or part time, or seasonal/temporary or regular. Note, that the law does permit an employer from prohibiting the use of accrued leave until the 91st day of employment, however.
  • Accrual isn’t clear or complete. This mandatory sick leave must accrue for all employees at a rate of at least 1 hour for every 30 worked, up to a total of 40 hours per year. As an alternative to the hourly accrual method, employers are permitted to front-load the entire amount of leave at the beginning of the year. For new employees who have not yet worked a full year, that amount can be pro-rated. The rules also permit employers to adopt different accrual methods for different classes of employees, provided the classification is established by the employer for reasons other than sick leave administration. For example, a company may opt to use the accrual method (i.e., 1 hour for every 30 worked) for hourly non-exempt employees and the front-load method (a lump sum of 40 hours or more) for exempt (salaried) employees. Also, a distinction may be drawn between regular full-time employees and part-time or temporary ones, or both. Either way, the written policy should be clear and cover all applicable classifications.
  • Too much notice is required. The Oregon law allows employers to require no more than 10 days’ notice of need for leave when the need is foreseeable. Pre-existing policies or rules that require more than 10 days’ notice need to be updated accordingly.
  • The policy includes an outdated list of permissible uses. What must be excused and not counted against an employee under the new sick leave law is broader than just an employee’s personal illness or medical care. If a current policy lists specific reasons that leave can be used for, it should be updated to include: time off for family member health issues, absences protected by Oregon’s domestic violence leave laws, absences due to school closures resulting from a public health emergency or other related public health concerns, time needed for attending/making arrangements for funerals and related absences, and any other reasons required under the new law.
  • Verification is required for situations that no longer permit it. Absent reasonable suspicion of abuse, medical or other documentation of the need for sick leave cannot be required unless the absence exceeds three days or is foreseen. Just as under the Oregon Family Leave Act (OFLA), the employer is required to pay the cost of any medical verification that is not covered by insurance or another benefit plan.
  • Carryover is not clearly addressed. The law requires that up to 40 hours of unused accrued sick leave be permitted to carry over into the next year. Employers can avoid carryover only by cashing out accrued leave at the end of the year and immediately front-loading the entire annual amount at the beginning of the next year.
  • Forfeiture is not addressed. Employees sometimes have the misconception that accrued sick leave must be paid out at termination. That is not true under current Oregon law, so it’s strongly recommended that if an employer does not plan to cash out the sick leave benefit at the end of employment, then it is stated clearly in its policy to avoid confusion or misunderstandings. Also, be sure that the full amount of previously accrued leave be credited back to an employee if he or she is rehired within 180 days. This does not necessarily need to be included in the policy, but be sure to comply if it applies.

 

A special note

There is a new wrinkle for employers that take on state public works projects or other prevailing wage work that needs special attention: the paid leave benefit mandated by the Oregon sick leave law may NOT be credited toward fringe benefits because prevailing wage laws only allow credit for sick leave benefits NOT mandated by law. So, for employers that offer only the 40 hours of paid benefits required by law, that amount now cannot be credited toward fringe. However, if additional benefits are offered beyond 40 hours, or if an employer is required only to provide unpaid sick leave but opt to make it a paid benefit, it can be credited toward fringe.

For employers working federal contracts, an executive order that will impose a similar sick leave requirement is scheduled to go into effect on Jan. 1, 2017, but with a higher accrual cap at 56 hours. The DOL in its final rule confirmed that the same interpretation will be applied in the context of the federally mandated sick leave.

Keep in mind that this brief summary is intended to highlight some unique, practical considerations related to the new sick leave law and related employer policies, and not replace independent legal advice for any particular situation or proposed policy.

Amy Robinson is a PC shareholder practicing in its employment practice group. She has Senior Professional in Human Resources (SPHR) certification as well as a Senior Certified Professional (SHRM-SCP) designation from the Society for Human Resource Management. Contact her at 503-598-7070 or amy.robinson@jordanramis.com.

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OP-ED: New Oregon minimum wage rules are nearly here /news/2016/06/27/op-ed-new-oregon-minimum-wage-rules-are-nearly-here/ Mon, 27 Jun 2016 18:50:44 +0000 /?p=153166 Attorney Amy Robinson offers a checklist to help employers prepare for Oregon's new minimum wage law, which goes into effect July 1.

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Amy Robinson
Amy Robinson

As you have likely heard by now, Oregon has adopted significant minimum wage changes that will take effect July 1, 2016. The new rate will increase annually in established increments until 2023. Thereafter, the rate will be adjusted for inflation as calculated by the Bureau of Labor and Industries commissioner.

The new rate schedules are also split up into three defined geographic regions: 1, the counties located within the Portland Metro Service District (i.e., Clackamas, Multnomah and Washington); 2, the “nonurban counties” (i.e., Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa and Wheeler); and 3, the remaining counties, which BOLI refers to as the “standard” region (i.e., Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco and Yamhill).

Just under the wire, BOLI last week rolled out new rules that are intended to define how the “employer location” will be determined now that it determines the applicable minimum wage rate.  Here are the key take-aways:

• For purposes of determining the applicable region and minimum wage rate, the employer’s “permanent fixed location” in Oregon will govern if the employee performs at least 50 percent of the work for that pay period at that location.

• If an employee makes deliveries as part of his or her duties, the “permanent fixed location” of the employer will still govern the appropriate region/minimum wage rate if the employee begins and ends regular work days at that same location. For example, a delivery driver who reports to work at the main office/distribution center in Gresham and makes deliveries to Pendleton and back during the same work day along the I-84 corridor would be required to make no less than the applicable minimum wage in effect for Gresham. For this year (July 1, 2016- July 1, 2017) that means $9.75 per hour.

• When more than 50 percent of an employee’s compensable time for a pay period is in a location other than the “permanent fixed location,” the “employer location” for purposes of determining minimum wage rate is the region in which the majority of work is performed. For example, if the employer’s corporate office is in Portland but it has employees who perform the majority of their work from a branch office in Enterprise, then the employees must be paid at least the applicable minimum wage in effect for the region covering Enterprise, which until July 1, 2017 will be $9.50 per hour.

• If none of the above apply and the employee works in more than one region in a single pay period, he or she must be paid either: 1, at least the minimum wage for each hour in each region where the work is performed, and the employer must keep records to reflect where the work was performed; or 2, the highest wage rate required in any region where work was performed by the employee for all hours worked in that pay period. If the employer chooses this option, it will be excused from having to keep records of where the work was actually performed.

• If employees perform work in more than one region in a pay period, the employer is required to maintain records of all locations worked unless the limited exception outlined above is met.

So, what should Oregon employers do now?

Again, these rules go into effect July 1, 2016. Employers with employees working in Oregon should make sure their pay practices are in line by that date, and ask for help from a qualified professional in advance if needed. At a minimum, they should:

• Prepare to pay the (new) appropriate minimum wage. If, based upon the rules outlined above, the employee is being paid more than one hourly rate within a single pay period, the applicable rates should be accurately reflected on the pay stub. For example, if a minimum wage employee worked 26 hours in Umatilla County and 14 hours in Clackamas County, the pay stub should reflect 26 hours at $9.50 per hour (the “nonurban” region rate for this year), and 14 hours at $9.75 per hour (the Portland-metro rate for this year). In the alternative, the employer can opt to pay the entire 40 hours at the higher rate of $9.75. Employers should take time to evaluate these options and make that decision now, so that payroll personnel have appropriate instructions in time to implement the decision and uniformity and consistency can be maintained going forward.

• Keep records of where the work is performed. This is mandatory for employees working in more than one of the defined regions in a single pay period, unless they will be paid the highest rate for all time worked. Even if not, employers in Oregon may be wise to consider doing so as a best practice to be able to demonstrate compliance in the event of a challenge or audit.

• Make sure the current minimum wage rate posters are posted. BOLI has published versions that are available at: www.oregon.gov/boli/WHD/pages/minimum_wage_posters.aspx.

Remember that these new rules and minimum wage rate changes did not alter the exemptions offered to certain industries and types of work, such as the exemptions available to certain agricultural employees, piece rate workers, and domestic workers. However, given the increase to the minimum wage amount, it is more important than ever to make sure an employee truly meets an applicable exemption, or the employer may risk having to pay both the increased amount of unpaid wages, but also potential penalties and attorneys’ fees if they have been proven later to have gotten it wrong.

Amy Robinson is an attorney in PC’s employment law practice group. She previously served as a human resources professional. Contact her at 503-598-7070 or amy.robinson@jordanramis.com.

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OP-ED: Resolutions for Oregon employers in 2016 /news/2015/12/28/op-ed-resolutions-for-oregon-employers-in-2016/ Mon, 28 Dec 2015 16:14:03 +0000 /?p=143515 In addition to the pressure of following through with personal New Year’s resolutions, Oregon employers face new rules starting the first of January. A couple of the more significant ones […]

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Amy Robinson
Amy Robinson

In addition to the pressure of following through with personal New Year’s resolutions, Oregon employers face new rules starting the first of January. A couple of the more significant ones impacting businesses in 2016 are: mandatory paid sick leave requirements, criminal history disclosure restrictions, and changes to noncompetition agreements.

 

Mandatory sick leave

With the passing of Senate Bill 454 B, employers in Oregon must now offer job-protected sick leave to all employees – even part-time, temporary and seasonal ones. For employers with 10 or more employees or those with six or more if the business is located in a city with a population of more than 500,000, that leave is paid time off. As of now, the only city in Oregon that exceeds the population threshold is Portland.

Paid sick leave accrues at a rate of one hour for every 30 hours of work, though employers are allowed to alternatively credit the entire lump sum amount of leave at the beginning of the benefit year (referred to as “frontloading”). Exempt employees will be presumed to work 40-hour weeks unless their regular work schedule is less than that, in which case it will accrue based on the hours of the employee’s regularly scheduled work week.

The permitted uses of this leave extend beyond an employee’s personal illness to include things such as time off to care for a sick family member, time off for the birth or adoption of a child, domestic violence leave, time off necessitated by certain public health emergencies, and for bereavement in the event of the death of a family member.

So, what resolutions should employers have related to mandatory sick leave?

1. Post the notice of sick leave rights in workplaces by Jan. 1, 2016.

2. Update sick leave or PTO policies if they already exist to make sure they comply with the new .

3. Give employees written notice of sick leave rights. An easy way is to enclose the updated policy with their next paycheck.

4. Ensure supervisors and those who administer attendance policies are aware of what absences are protected so that employees are not impermissibly penalized for taking what is supposed to be protected time off.

 

Job application restrictions

With the passing of House Bill 3025 A, Oregon has joined the “ban the box” movement – an effort by cities, counties and states, to remove a checkbox on applications that asks any variation of, “Have you ever been convicted of a crime?” Nineteen states now have such a law, and more are expected to follow in their footsteps.

To be clear, Oregon’s law does not restrict employers from considering a candidate’s criminal history. It simply restricts an employer’s ability to require an applicant to disclose criminal history on the application or any time prior to the initial interview. During or after the interview, an employer can ask about an applicant’s criminal history. If there is no interview, an employer can ask after a conditional offer of employment is made.

There are a few exceptions, particularly when federal, state or local law requires the consideration of criminal history. A few examples would include adult foster care, hospice and home health care jobs that require direct contact with patients.

So, what resolutions should employers have related to “ban the box?”

1. Ensure that application forms, and any other pre-employment documentation, do not ask that criminal histories be disclosed.

2. Ensure that hiring personnel know not to ask about criminal histories of any applicants or potential applicants until the interview stage, or offer stage if there is no interview.

 

Noncompetition agreement caps

House Bill 3236 A amends ORS 653.295 by reducing the length of enforceability of noncompetition agreements from 24 months to 18 months after the date of termination. As a refresher, employers must notify the employee in a written employment offer that a noncompetition agreement is required at least two weeks before the start date. Additionally, the employer must provide the terminated employee compensation of at least 50 percent of the employee’s annual salary plus commissions or at least 50 percent of the median family income of a four-person family, whichever value is greater, for the entirety of the time that a former employee’s noncompetition agreement is in effect.

So, what resolutions should employers have related to noncompetition agreements?

1. Any noncompetition agreements or related post-employment restrictions should be reviewed by qualified counsel for enforceability in light of these changes to the law.

2. Anticipate that noncompetition limitations entered into after Jan. 1, 2016 won’t last beyond 18 months, and plan accordingly.

Amy Robinson is a shareholder in PC’s employment law practice group. She previously served as a human resources professional. Contact her at 503-598-7070 or amy.robinson@jordanramis.com.

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OP-ED: The grinch that could steal Christmas /news/2014/12/18/op-ed-the-grinch-that-could-steal-christmas/ Thu, 18 Dec 2014 20:27:39 +0000 /?p=128893 Federal and state government agencies have been increasing enforcement efforts to address misclassification of workers as contractors rather than employees. The U.S. Department of Labor has added 250 investigators to […]

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Amy Robinson
Amy Robinson

Federal and state government agencies have been increasing enforcement efforts to address misclassification of workers as contractors rather than employees. The U.S. Department of Labor has added 250 investigators to aid with compliance efforts, and the IRS also has been transparent in its intent to step up audits and enforcement efforts to combat misclassification. Meanwhile, the state of Oregon created an Interagency Compliance Network to proactively educate businesses and coordinate enforcement activities between key state agencies.

Courts, too, are being asked to opine on worker classification more than ever, and some decisions totally contradict what had been traditional business models in certain industries. This includes a 2014 decision by the U.S. Court of Appeals for the Ninth Circuit, which held that under Oregon , a class of 363 full-time FedEx delivery truck drivers were employees and thus entitled to additional wages and overtime.

So, why is misclassification such a big deal?

Well, for taxing authorities, classifying a worker as a contractor rather than an employee results in lost tax revenue. For others, it means the worker will not receive the benefit of employment-related legal protections and benefits that the worker may otherwise be entitled to.

For businesses that incorrectly classify employees as independent contractors, scenarios can be “make or break.” That’s because getting it wrong can mean the business may be on the hook for a host of additional unplanned costs, including:

• Payment of back wages and benefits that were neither anticipated nor budgeted for;

• Employment-related taxes on all wages owed to the misclassified worker(s);

• Fines, interest, and/or other penalties, including attorney fees, if the mistake is uncovered by the regulatory agency, or in connection with a civil claim brought by the worker;

• Additional workers’ compensation insurance premiums and potential claims for workplace injuries; and

• Liability for employment-related claims by the misclassified worker, including anti-discrimination, anti-retaliation, wage and hour, workplace safety and health, and protected leave laws.

These amounts can be staggering for even a single misclassified worker. Where there are multiple workers, the figures grow exponentially. This can also occur where an otherwise properly classified contractor employed its own workers to perform services, but didn’t follow the requisite formalities.

Isn’t this as simple as looking at whether the business issued a 1099 or a W-2 at the end of the year?

Unfortunately, no. Instead, a patchwork of fact-specific tests need to be considered. There are no fewer than three multi-factored tests that could apply under federal law. In Oregon, four tests may apply. Just as Oregon has its own tests, so do other states. If a worker performs work in other jurisdictions, the business must also consider the tests applicable in those states.

What generally isn’t relevant to any of the tests is what the business or the worker intended or often even what the paperwork says. Instead, the best practice is to consider the applicable tests before commencing the work so that the relationship can be properly structured to comply with the applicable legal standards.

Given the inherent risks of misclassification, the complexities and fact-specific nature of the proper determination of each of those issues, and the increased enforcement efforts at every level, it’s easy to see how a mistaken misclassification has the potential for a huge negative impact on a business. For these and other reasons, I typically recommend that the proposed relationship be evaluated, with advice of qualified counsel, and structured so that all of the potentially applicable tests are met, and then memorialized in an appropriate written agreement, before any work commences. By properly and proactively applying the appropriate standards in advance, businesses can best avoid the foreseeable risks.

Hopefully, this brief summary has been useful. Of course, it is merely intended to highlight the issues and legal standards, and point out some common risks and pitfalls related to misclassification. This synopsis should not replace independent legal advice for any particular situation.

Amy Robinson is an attorney in PC’s labor and employment law practice group. She has experience with a full range of employment issues. Contact her at 888-598-7070 or amy.robinson@jordanramis.com. This article is intended to inform readers of general legal principles; they should consult with competent counsel when addressing specific situations.

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